Collusion occurs when
a. a firm chooses a level of output to maximize its own profit
b. firms get together to maximize joint profits
c. firms refuse to follow their price leaders
d. firms petition their U.S. senators for favors
e. two firms' price and output decisions come into conflict
QUESTION 2Suppose you want to buy a boat, but you know that interest paid on a boat loan is not tax deductible. Therefore, you take out a home equity loan, the interest on which is still tax deductible. This procedure is an example of
a. illegal tax avoidance
b. illegal tax evasion
c. legal tax avoidance
d. legal tax evasion
e. the answer cannot be determined from the information given
QUESTION 3A cartel's profit-maximizing price is
a. on the demand curve at the quantity where marginal cost equals marginal revenue
b. on the demand curve where it intersects its marginal cost curve
c. the highest price possible
d. determined by using the cost-plus pricing model
e. where the kink in the demand curve occurs
QUESTION 4Filing a fraudulent income tax return that understates income or overstates deductions is known as
a. tax evasion
b. logrolling
c. tax avoidance
d. rent seeking
e. profiteering
QUESTION 5A cartel's profit-maximizing quantity occurs where the cartel's
a. marginal cost equals marginal revenue
b. marginal cost equals demand
c. price is highest
d. cost is lowest
e. demand curve has a kink
QUESTION 6Legal attempts to arrange one's financial decisions so as to pay the least tax possible are known as
a. tax evasion
b. logrolling
c. tax avoidance
d. rent seeking
e. underreporting
QUESTION 7A cartel's marginal cost curve is the
a. highest of all the individual firms' marginal cost curves
b. lowest of all the individual firms' marginal cost curves
c. horizontal sum of all the individual firms' marginal cost curves
d. average of all the individual firms' marginal cost curves
e. product of all the individual firms' marginal cost curves
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